DealMarket Digest_Issue 49

DIGEST

49

SEE WHAT’S NEW AND NOTEWORTHY IN PRIVATE EQUITY THIS WEEK /// ISSUE 49

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M&A Trends Western Europe: April 2012 • Zephyr research

PE Wants Luxury Cellphone Vertu Family Offices Form Fund Targeting Real Estate Debt Eight Types of Angel Investors to Avoid • From the Crowd Blog

PEI Research Shows New York PE Central Signs of Optimism in Israel VC Investment?

Quote of the Week: Embedded in a PE Bootcamp

May 04, 2012

M&A TRENDS WESTERN EUROPE: APRIL 2012 The value of deals targeting companies based in Western Europe was down again in April to €43.94 billon, according to the latest figures from Zephyr. Other facts are listed below.

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Deal value in April down by 8 per cent compared to March.

Deal value down by 24 per cent down compared to February.

Volume is down by 30 per cent compared to March.

It is half of the number of deals recorded in June 2011, the high point of the past 12 months.

Ten transactions of € one billion or above in April.

There was a single transaction that exceeded €5 billion.

PE WANTS LUXURY CELLPHONE VERTU The FT reports this week that Permira is in discussions to acquire Nokia’s UK-based Vertu brand cellphone company for about EUR 200 million, citing unidentified sources. The Vertu phones tout handmade craftsmanship and precious metal and gem trimmings, as well as high-end value added services and owner privileges. The PE firm is building a portfolio of luxury and tech brands such as Hugo Boss and Valentino, according to the report. EQT has also been eyeing Vertu, it said.

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FAMILY OFFICES FORM FUND TARGETING REAL ESTATE DEBT PIE Magazine reports that Queensgate Investments, a private equity real estate fund manager, has plans to invest GBP 500 million in debt-based opportunities across Europe. Queensgate’s investors are family offices and ultra high-net-worth families, says the magazine. Over the next three years the company expects to find opportunity in the EUR 500 billion of property debt in Europe that will expire over the next three years. Regulatory changes such as Basel III will create unique buying opportunities for investors looking to target hotels and special situations in the UK and Europe, both equity and debt-side approaches.

EIGHT TYPES OF ANGEL INVESTORS TO AVOID Marty Zwilling, CEO and Founder of Startup Professionals, an advisory firm for entrepreneurs, contributed a column in Fortune’s From the Crowd blog making the point that not all business angel money is equal. He lists eight types that might not be desirable as investors, including “sharks”, “hasbeens”, and “litigious” angels. Sharks, for example, can be identified by a tortuous term sheet process and litigious angels are quick to go to court and act intimidating and threatening in negotiations, while has-been angels, are a sort of wannabe angel who will waste an entrepreneur’s time because they are not really interested in investing. He recommends having legal advice for the angel round, and doing due diligence on would be investors.

PEI RESEARCH SHOWS NEW YORK PE CENTRAL Private Equity International magazine (PEI) released its top 300 PE firms this week. Among the findings: New York is the base for the largest pool of PE capital. VC Circle offered up an analysis, which we combined with PEI’s below to list the key findings.

• The top 50 PE groups saw fundraising (total of past five years) drop for fourth year in a row • Greater New York is the center of the private equity universe, says VC Circle, hosting firms with capital totaling more than three times its nearest rival, London.

• TPG is the largest based on fundraising over the past five years. Its strength is that it offers a range of growth capital, venture, and special situations funds. It’s also a global operation with locations in North America and Western Europe, but also Brazil, Russia and China.

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Investors show preference for targeted investments over the giant buyout funds.

In total, the 300 firms which made the 2012 list have raised USD 1.3 trillion in the last five years.

The top 50 firms raised USD 704 billion of that total.

The amount raised by smaller firms is steadily rising, from USD 524 billion in 2009 to USD 606 billion now.

• CVC Capital and Apax are the only two non-US-based firms to make it into the top 10, in sixth and seventh place.

• The PEI 300 always throws up some interesting results. This year, for example, Abraaj Capital, CDH Investments, JC Flowers & Co, and Oaktree Capital Management were some of the firms to have risen further up the rankings for the third year running. Some firms, like Permira, Charterhouse, and Madison Dearborn Partners, have slipped in the rankings due to their fundraising cycles: 2006vintage funds no longer count towards a firm's total.

QUOTE OF THE WEEK: EMBEDDED IN A PE BOOTCAMP “You make investments in people. We believe that North American manufacturing deserves to exist.”

Image source: Monomoy Capital Partners

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Who said it: John Stewart, Monomoy Capital Partners In Context: In a BusinessWeek cover story based on a journalist’s experience at a week-long “bootcamp” for entrepreneurs, John Stewart talks about investing in the US. The bootcamp is one of the services Monomoy Capital Partners, a small mid-market PE company, offer its portfolio company executives. Each year Monomoy sends about 20 of its portfolio entrepreneurs on a mission to explore the operations of a portfolio company to improve efficiency. This time a journalist participated and his view of the experience was positive, despite the chainsaw wielding executive in the photo used to illustrate the story (See thumbnail image left). The statement about North American manufacturing came about when Stewart was explaining that if a business can get costs down, there’s no reason not to make things in the US. As a PE investor, he feels that offshoring carries political risks and incurs supply-chain costs, and it can prove difficult to teach the US culture to a foreign workforce.

Where we found it: BW

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Image source: BW website

The Dealmarket Digest empowers members of Dealmarket by providing up-to-date and high-quality content. Each week our in-house editor sifts through scores of industry and academic sources to find the most noteworthy news items, scoping trends and currents events in the global private equity sector. The links to the sources are provided, as well as an editorialized abstract that discusses the significance of the articles selected. It is a free service that embodies the values of the Dealmarket platform delivers: Professional, Accessible, Transparent, Simple, Efficient, Effective, and Global.

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Editor: Valerie Thompson, Zurich

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